2017年-世界发展银行全球_BM_and_FBOVESPA_Sustainability_Index_and_the_Responsible_Practices_of_Brazilian_Corporations___Issue_Brief_4页_714kb

BM&FBOVESPA Sustainability Index & the Responsible Practices of Brazilian Corporations

Core Content

The BM&FBOVESPA Sustainability Index (ISE) was launched in 2005 with financial support from the International Finance Corporation (IFC). It is designed to group companies with superior sustainability performance in environmental, social, and governance (ESG) areas. The ISE serves as an investment tool for responsible investors, helping them make informed decisions through either direct investment in ISE-linked securities or by using the index's analysis as a proxy.

Main Points

• Purpose of the ISE: To promote corporate sustainability by creating a benchmark for companies to improve their ESG practices and attract responsible investors.
• Partnership: Developed in collaboration with Fundação Getúlio Vargas (FGV), which provides academic and research support.
• Impact on Companies: The evaluation found that the ISE significantly influenced corporate sustainability practices, especially among companies that have been members for a long time.
• Benefits Reported: Companies in the ISE noted improvements in environmental and governance performance (86%), and social performance (57%). They also reported enhanced reputation and, to some extent, positive effects on stock prices and access to capital.
• Non-Members Also Benefited: Even companies not in the ISE benefited from the increased awareness of sustainability practices in the market.
• Challenges: Despite the benefits, the ISE has not had a clear impact on liquidity or stock prices. Additionally, the index has limited influence on large institutional investors due to its relatively small number of component companies.
• SRI Industry Development: The ISE spurred the creation of new SRI funds, though the market remains dominated by older funds. The total assets under management in SRI funds reached $580 million in 2010, with the top two funds holding 70% of the market share.
• Future Recommendations: To enhance the ISE's impact on financial markets, it should be used as an investment benchmark for evaluating SRI portfolio performance, increase transparency, and improve the entry questionnaire to focus on industry-specific sustainability issues.

Key Findings

• Positive Impact on Sustainability Practices: Over 86% of group 1 companies (long-term members) improved their environmental and governance practices, while 57% improved social performance.
• Role as a Reference Guide: The ISE acts as a guide for companies to initiate and improve their sustainability strategies.
• Low Response Rate to Membership: The percentage of companies accepting ISE membership invitations has decreased from 52% in 2005 to 29% in 2010, while the number of invited companies increased.
• Lack of Financial Impact Evidence: No clear evidence was found that ISE membership significantly affects stock prices or liquidity, though companies believe in the long-term value of sustainability.
• Limited Benchmarking Effect: The ISE has not fully served as a benchmark for larger investors due to its limited diversification and lack of strong evidence linking sustainability to investor returns.

Conclusion

The ISE has played a significant role in promoting corporate sustainability in Brazil, especially among listed companies. While it has not yet demonstrated a strong impact on financial metrics like stock prices and liquidity, it has contributed to greater awareness and improvements in ESG practices. To further enhance its influence, the ISE should be developed as a more robust investment benchmark and improve transparency and industry-specific relevance.

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About IFC

• IFC Overview: A member of the World Bank Group, IFC focuses on private sector development in developing countries to reduce poverty and improve livelihoods.
• Strategy in Brazil: Promotes access to finance, strengthens infrastructure and public services, and supports sustainable practices, especially in the Amazon region.
• Commitment in Brazil: As of June 2010, IFC had committed $2.4 billion to projects in Brazil.

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About BM&FBOVESPA

• Exchange Overview: Latin America's leading exchange in terms of transaction volume and one of the world's largest in market value.
• Market Share: In 2009, it accounted for 80% of derivatives trading and 90% of equity trading.
• Governance: Aims to provide a transparent and safe environment for listed companies through a consistent governance framework.

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About FGV

• Academic Contribution: FGV-EAESP is a leading institution in Brazilian business administration, and the Center for Sustainability Studies (GVces) plays a key role in sustainability research and education.
• Role in ISE: Provided academic and research support for the development and evaluation of the ISE.